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Wal-Mart price war: Indie bookstores fight back

October 23, 2009

Slashing the cost of new hardcover books to $8.99 is “illegal predatory pricing,” The American Booksellers Association said yesterday, and called for a Justice Department antitrust investigation into Wal-Mart, Amazon and Target, reports Publishers Weekly.

Noting that “this episode was precipitated” by Amazon’s “below cost” pricing of e-books for its Kindle electronic reader, the ABA also requested government scrutiny of the small but fast-growing digital segment of the publishing industry.

The ABA, which represents independent booksellers, sent a letter to the Justice Department warning that such pricing for new hardcover books, such as Sarah Palin’s Going Rogue or Stephen King’s Under the Dome, “is damaging to the book industry and harmful to consumers,” according to a story in The New York Times.

By treating new blockbuster hardcovers as “loss leaders,” charged the ABA, the big three discounters are attempting to “win control of the market for bestsellers.” Retailers pay publishers half the cover price for new books. That’s $17.50 for a $35 book like King’s Under the Dome, making Amazon’s discounted price of $9 far below cost.

“What’s so troubling in the current situation is that none of the companies involved are engaged primarily in the sale of books,” says the ABA letter. And yet, “the entire book industry is in danger of becoming collateral damage in this war.”

The ABA warned such prices are “devaluing the very concept of the book. Authors and publishers, and ultimately consumers, stand to lose a great deal if this practice continues and/or grows.” It endangers independent bookstores, where “hand selling” by knowledgeable clerks to regular customers can turn otherwise neglected books into bestsellers.

“For our members-locally owned, independent bookstores-the effect will be devastating,” says the ABA’s letter. “There is simply no way for ABA members to compete. The net result will be the closing of many independent bookstores, and a concentration of power in the book industry in very few hands.”

The price war started last week when Wal-Mart announced it would sell 10 hot new hardcover books at $10 through its website. Amazon immediately matched the price on select pre-ordered books, forcing the price down to $8.99 at Wal-Mart and $9 at Amazon. Target joined the battle on Monday, pricing the same titles at $8.99 for books pre-ordered on its website.

The ABA, which asked for a meeting with Justice Department anti-trust lawyers “at your earliest convenience,” called the pricing practices of Wal-Mart, Target and Amazon “catastrophic.”

“If left unchecked, these predatory pricing policies will devastate not only the book industry, but our collective ability to maintain a society where the widest range of ideas are always made available to the public, and will allow the few remaining mega booksellers to raise prices to consumers unchecked.”

To read the entire ABA letter, click here.

6 Comments leave one →
  1. October 23, 2009 10:51 am

    This will be it for the book industry. Hopefully the big three, will be looked at like an oligopoly and with that not true capitalism. Then they can stop it. If they say this is just open capitalism then we will have three book store left. It clearly is not open capitalism. The problem will lie with our lying congress. For years some con men and complete jerks have stood there and said no rules for oil companies. It will hurt capitalism. The fact is the oil and gas companies are not open capitalism. They are oligopolies and some times monopolies. They need regulation under those guide lines. That is economic fact. Not every one can start an oil company or refineries. It is not open capitalism. Same with electricity. Not everyone is allowed to open a electric company. The congress people that say this is open capitalism are thieves and lie a lot. It is a con game. The same will be said about these 3 big companies. In a true capitalism system oligopolies and monopolies are not supposed to be allowed. That is where government is supposed to get involved and protect the consumer a people. Usually these big companies buy our congress. The congress is supposed to be for the people and by the people. Not against the people. Sha-ching.,

  2. October 23, 2009 10:54 am

    This will be it for the book industry. Hopefully the big three, will be looked at like an oligopoly and with that not true capitalism. Then they can stop it. If they say this is just open capitalism then we will have three book store left. It clearly is not open capitalism. The problem will lie with our lying congress. For years some con men and complete jerks have stood there and said no rules for oil companies. It will hurt capitalism. The fact is the oil and gas companies are not open capitalism. They are oligopolies and some times monopolies. They need regulation under those guide lines. That is economic fact. Not every one can start an oil company or refineries. It is not open capitalism. Same with electricity. Not everyone is allowed to open a electric company. The congress people that say this is open capitalism are thieves and lie a lot. It is a con game. The same will be said about these 3 big companies. In a true capitalism system oligopolies and monopolies are not supposed to be allowed. That is where government is supposed to get involved and protect the consumer and people. Usually these big companies buy our congress. The congress is supposed to be for the people and by the people. Not against the people. Sha-ching.,

  3. rachel permalink
    October 23, 2009 11:10 am

    How can they afford to sell books for so much less than they are paying?

    I’m glad that they are fighting back. This is really important and it is nice to see that they are doing something about it now before it gets any more out of control. I know that there will always be books around for me to read, but this whole thing scares me. A lot. I like book stores. I like books. And I don’t want bad things to happen to them. Like death.

    Go ABA. (it’s your birthday)

  4. Tommy permalink
    October 23, 2009 1:41 pm

    “We would find these practices questionable were they taking place in the market for widgets. That they are taking place in the market for books is catastrophic” from A.B.A. letter to D.O.J..

    Indeed!

    Widgets? What about Spacely Sprockets and Cogswell Cogs?

    What do I get A.B.A. for it’s birthday? They seem to have everything.

    Seriously though, I am glad the A.B.A. is confronting the Department of Justice with what has to be illegal price slashing. Also, if you read the letter it contains the addresses of the D.O.J. justice and attorney. (hint, hint…)

  5. Candice Simmons permalink
    October 23, 2009 7:46 pm

    Awful. But what do you do? Sort of reminds me of what happened to the music stores when people started downloading the music and burning cds. So many music stores are no more, like Towers. I love the internet and technology, but it is just squashing so many of my favorite past times.

  6. Candice Simmons permalink
    October 23, 2009 7:46 pm

    Does Chauncey Mabe have a solution?

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